Hello, I recently inherited 100 acres split with my 2 brothers on mineral rights, Its located in Andrew Mcfadden Survey A-423. Two weeks ago I received an offer for $500 an acre and 1/5 royalty to lease on a new well from a landman. My brothers immediately cashed their checks and signed his contract. I feel I should do some due diligence and was hoping for some advice. I am really new to this, any advice would be welcomed.
Jason, you might want to check the railroad commission website on the GIS Map and see if there is activity around your tract.
I would think you would want a 1/4 cost free royalty and whatever the best bonus payment you can get on certainly no longer than 3 year lease term and depending on activity you might want it shorter so as to encourage development.
Thank You William, I did. It seems there may be but Im not quite sure what im looking for. I will work on the 1/4 angle, what does cost free mean? Thanks
William Douglas Archer said:
Jason, you might want to check the railroad commission website on the GIS Map and see if there is activity around your tract.
I would think you would want a 1/4 cost free royalty and whatever the best bonus payment you can get on certainly no longer than 3 year lease term and depending on activity you might want it shorter so as to encourage development.
Costs has to do with the deduction of costs that the oil company is allowed by the lease to offset against your royalty. Cost free is intended to not allow any costs other than severance taxes to be taken from your share.
Assuming you negotiate a 25% royalty, i firmly believe the costs of processing, transportin, enriching, etc are part of what they are getting in the 75% you are allowing them to have. You also will want to determine where they intend to drill. I s it on your 100 acres or adjacent wherein they intend to pool your acreage.
If you dont lease, and they pool, i understand you could get left out. 100 acres is not all that large so they will very likely need to pool this land with other lands.
Good luck.
Jason I signed a lease on this same Survey back on Sept 1 of 2013. Terms were simular. Simonds Land services wa s the Lessee. I would be interested in who you are dealing with on the lease. Also feel free to ask any questions as I believe that we are advantaged by sharing as much info.
Hi joe Im sorry its taken me so long to get back with you. Feel free to contact me at jgrace@titanfactorydirect.com
joe marvin blair said:
Jason I signed a lease on this same Survey back on Sept 1 of 2013. Terms were simular. Simonds Land services wa s the Lessee. I would be interested in who you are dealing with on the lease. Also feel free to ask any questions as I believe that we are advantaged by sharing as much info.